Discount Online Brokers

Share trading made easy - go online

Hello, Mr Sample, it's Velele here, nice to meet you finally. I had been providing stock broking services to Mr Sample for two years before I met him. This is the reality of the times we are living in - gone are the days where you knew your stock broker by name, since most things in the technological era are done electronically.

What is online trading? It is an electronic trading platform that allows the user to place orders for financial instruments online. These include shares, warrants, bonds, options, futures and currencies, which can all be traded online.

The online trading platform has become standard with any account you open with a stock broker. The two trading accounts that you are likely to be offered by a stock broker are a non-discretionary or discretionary/managed account. The minimum investment amounts are subject to each broker's discretion.

A non-discretionary account is where the investor (client) has the final say in terms of the buying and selling that takes place on the account. The stock broker acts as an agent and only transacts on the client's instruction. Non-discretionary clients usually use the online facility more than the discretionary clients. Stock broker advice is limited on the non-discretionary account. The minimum investment amount and general trading costs are usually lower than in a non-discretionary account, since this is a basic account.

The managed account calls for a larger minimum investment amount with the client, in effect, requesting a stock broker to buy and sell shares on his behalf, at the broker's discretion. Managed accounts attract management or advisory fees in addition to trading fees.

Services offered by stock brokers will depend on whether they are full-service or discount brokers. Full-service stock brokers are pricier than discount brokers due to the in-depth research they provide, as well as value-added services, whereas discount stock brokers have limited in-house research.

The model of stock brokers is much like a contract or prepaid offering on a phone. Contract customers enjoy the benefits upfront and pay for the usage of the network and phone over time, whereas prepaid customer's costs and benefits are based on the cash on hand. Discount stock brokers tend to attract prepaid users, whereas full-service stock brokers attract contract customers.

What should investors expect from an online trading platform?

Best Online Stock Brokers, August 2011 -Cheap Discount Low Cost ...

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